Wednesday, November 16, 2011

Who (or What) Killed the Obama Ozone Rule?

In today's New York Times (here), John Broder takes us inside the White House to explore the political machinations that resulted in the demise of the EPA's proposed ozone standards under the Clean Air Act. I have my doubts about certain aspects of the story, including the insinuation that OIRA chief Cass Sunstein was somehow out to "make his mark" by stomping down the EPA rule. However, Broder's overall story does strongly support an argument I make in my new paper on the political uses and abuses of cost-benefit analysis (CBA) (here), that the Obama Administration's CBA for its ozone rule played a significant political role in its demise. The Obama standard would have generated fewer net social benefits (on median estimates) than the Bush standard it would have replaced. It was, relatively speaking, less efficient. Thus, it would have been politically difficult to justify, especially heading into an election year. No doubt other, purely political considerations also played a part in the President's decision, but the fact that the CBA played any significant role is noteworthy, especially considering the Clean Air Act's express prohibition on cost-considerations in setting  air quality standards. Simply put, as I argue in my new paper, cost considerations matter even when the law says they cannot.

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